Iowa lawmakers, casinos, lottery 'all in' for sports betting

Among the questions for lawmakers: Who will run it?

Gov. Kim Reynolds and other administration officials listen in December to a presentation at the state Capitol by Wes Ehrecke of the Iowa Gaming Association. Ehrecke is among those who would like to see sports betting legalized in Iowa. (Rod Boshart/Gazette Des Moines Bureau)A dealer shuffles the deck for a game of blackjack at the Riverside Casino, Casinos would like to run sports betting, if legislators legalize it in Iowa, as would the Iowa Lottery. (Liz Martin/The Gazette)Rep. Jake Highfill
R-JohnstonMary Neubauer
Iowa LotteryWes Ehrecke
Iowa Gaming Association

Following a U.S. Supreme Court ruling in May overturning a federal law that had prohibited legalized sports betting in all but Nevada, Iowa lawmakers, retailers and casinos are looking at how best to bring black market bettors into the light.

“They’re all in,” Rep. Jake Highfill, R-Johnston, said about Democratic and Republican colleagues who have been calling him since the court ruling.

It’s the same at the Iowa Lottery where Vice President Mary Neubauer has been fielding calls from retailers who want in on the action.

In June, the Lottery board unanimously approved a motion “to explore sports lottery and its feasibility in Iowa with vendors and Iowa lawmakers.”

And Iowa’s casino industry wants lawmakers to approve legislation legalizing sports betting through casino platforms, including mobile apps, that would allow Iowans to establish an account to place bets on college and pro sports, according to Wes Ehrecke, CEO of the Iowa Gaming Association.

Legislative action

The starting point when the Legislature convenes in January likely will be House File 2448, which won approval in the House State Government and Ways and Means committees. However, there wasn’t a consensus about the bill among majority Republicans in the House, and the Senate took no action.

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Now, Highfill, the bill’s manager, is working with legislative leaders as well as Democrats in the House and Senate who are interested in legalizing sports betting. Perhaps not coincidentally, they’re from communities with casinos.

“Now that the Supreme Court has ruled, there is a lot more awareness,” Ehrecke said.

The gaming association, which backed House File 2448, is planning to meet with legislators this summer to educate them on the pros of legalizing sports betting and setting a tax rate that would allow Iowa casinos to compete with offshore, illegal sites “and certainly the tribal casinos — neither of which will pay any taxes.”

Who will run it

But it’s not just casinos, Highfill said. Convenience stores, grocers and other retailers are interested, and some professional sports leagues want an “integrity fee” if the state gets into sports betting.

There’s room for both the Lottery and casinos, Neubauer said, noting that about 70 percent of sports betting worldwide is operated through lotteries.

Currently, the Iowa Racing and Gaming Commission oversees casino gambling while the Lottery oversees the state’s involvement in a variety of games including scratch tickets and the multistate Powerball.

Casinos are more likely to offer what Neubauer called “full-blown sports betting” on everything from the coin toss at the start of a game to whether the next pitch will be a ball or strike to the outcome of a championship game or series.

Lottery retailers likely would offer a few standard choices designed to appeal to the more casual bettors rather than the full-scale sports bettor, Neubauer said.

Advantages

Whatever the appeal of the games, sports betting doesn’t appear to offer a huge jackpot for the state. Highfill estimates the state’s cut of sports betting would be in the “tens of millions.”

Based on the research the Lottery has done, Neubauer said the state tax revenue likely would be between $1 million and $10 million.

By comparison, the casino industry generated more than $319 million in overall taxes, according to the Racing and Gaming Commission.

Despite the low rate of return for the state, Neubauer said Iowans already are engaged in sports betting. By legalizing it and regulating it, the state would be providing consumer protection.

Now, she said, a bettor has no guarantee of getting paid what they are owed, and their bets may be supporting a variety of illegal activities.

More bankruptcies

Tom Chapman, a lobbyist for the Iowa Catholic Conference, isn’t convinced the state can make gambling safer.

He is confident, though, if sports betting is made legal, there will be more of it.

“From a Catholic perspective, as long as it’s recreational in an atmosphere of moderation and control, it’s OK,” Chapman said. “But for many people, that’s not the case. There will be a certain percentage who will become addicted, and we will see more bankruptcies, more family issues.

“There are a lot of things people do that shouldn’t be legalized,” he said.

Sports betting

• Nearly 1 in 5 Americans bet on sports in the past year.

• People ages 18 to 49 support legalized sports betting by wide margins, but support is less for those over age 50.

• An estimated 28 million Americans say they would be more likely to wager on sports if sports betting was legal.